CHICAGO: McDonald’s Corp has posted its first-ever quarterly loss as it absorbed the costs of closing hundreds of its fast-food restaurants and scaled back its profit growth targets.
The world’s largest restaurant company, facing a fierce price war and changing consumer tastes in the United States, said on Thursday it would close an additional 517 weak-performing outlets there and in Japan.
“Many of their markets have been super-sized for too long,” observed US Bancorp Piper Jaffray analyst Allan Hickok. “They’re going to skinny them down.”
For the fourth quarter of 2002, McDonald’s posted a net loss of US$343.8mil, more than four times greater than it had forecast just five weeks ago.
Last week, the company said it would no longer provide quarterly earnings forecasts.
McDonald’s retrenchment signals a reversal for the company that launched something of a cultural revolution in the 1950s, when founder Ray Kroc began offering hamburgers and french fries at his signature Golden Arches restaurants all over the United States, and later the world. At one point the company was opening one new store every four hours.
But customer service in recent years has suffered in the wake of heady growth.
Meanwhile, rivals like Burger King Corp copied McDonald’s fast-food formula, leading to increased competition. The company also became an icon of global capitalism, blamed for everything from the destruction of the environment to obesity in America.
The company took charges of US$656.9mil after taxes in the fourth quarter, mainly to cover the cost of closing 719 restaurants, exiting the markets of Bolivia, Paraguay and Trinidad, restructuring in the Middle East, cutting some 600 jobs and ending a multi-year technology project. – Reuters
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